FARC Attacks Setback for Colombia Oil

Recent
attacks against the Caño Limon-Coveñas pipeline
cut the daily production by 7 percent, a setback as Colombia seeks to increase
its oil exports.

BY LATIN
AMERICA ADVISOR
Inter-American Dialogue

There were 259
attacks on oil pipeline infrastructure in Colombia last year, the highest
figure in a decade, according to Defense Ministry data. Who has been behind the
attacks, and what factors are driving them? How have they affected the
country's oil output? Will the situation get worse or better? What should be
done to improve the security situation for Colombia's energy sector?

Christina
L. Madden, director at the Council on Global Security and Governance: The success of Colombia's
oil industry in recent years has made it a target of attacks by the country's
two largest rebel groups, the Revolutionary Armed Forces of Colombia (FARC) and
the National Liberation Army (ELN). While the stated motive of both leftist
groups is to broaden citizens' access to natural resource royalties, the
attacks point toward the rebel groups' desperate attempts to maintain leverage
during ongoing peace negotiations. For the ELN, the attacks and kidnappings are
a way to demonstrate that it poses a serious enough threat to be included in
the negotiations. In the case of the FARC, the attacks also signify a change in
the group's tactics following a series of high-level losses in recent years and
the appointment of a new commander, Timochenko. It is worth noting that the
FARC and ELN are not the only actors taking issue with the country's oil and
gas boom. Following a rebel attack on the Caño Limón-Coveñas pipeline in March,
delays were caused to the pipeline repairs when the indigenous U'wa community
blocked access to the site, demanding the pipeline be rerouted away from their
territory and that a nearby gas exploration project be halted due to
environmental concerns. Security issues and social unrest have led to
short-term production interruptions, increased transportation costs and waning
investor confidence. Shares of several local energy companies are down, and
Colombia's overall oil output fell to an average 935,000 barrels per day in
April, the lowest level since August 2012 and well below the record of 1.12
million barrels per day reached last November. The current situation, however,
has not yet affected long-term forecasts for the country's economic growth or
oil projections. Rebel attacks have historically been more frequent leading up
to an election, and the severity of the attacks on Colombia's energy sector may
diminish after the upcoming presidential election and the conclusion of peace
negotiations.

Maria
Velez de Berliner, president of Latin Intelligence Corporation: About 68,000 members
of Colombia's army protect the oil sector, from generation, highways, bridges
and refineries through transmission lines and port facilities. Tank trucks
travel with military convoys. However, the energy infrastructure is not immune
to attacks by 'bacrims' (bandas criminales), factional groups of the FARC and
the ELN (historic saboteurs of the oil industry) and sundry criminals.
Territorial control, extortion, kidnappings, contraband and 'political
messages' drive these groups. The attacks earlier this year against state-owned
Ecopetrol's Caño Limón-Coveñas and Transandino pipelines accrued significant
losses. The key to solving the sector's current insecurity lies in the presidential
elections through the political appointees the new president names to head the
National Hydrocarbons Agency (NHA), Ecopetrol and its board of directors, and
the incentives and guarantees the new administration gives to foreign
investors. Seeking re-election, President Santos focuses on peace, economic
participation and equity, and countrywide stability. Senator-elect Álvaro
Uribe's opposition candidate supports military solutions, not a peace process.
Having created the NHA, Uribe is likely to insist on applied-force solutions to
stem the attacks and work interruptions in the energy sector, and guarantee
military-backed security to investors. Were Santos to prevail and secure a
peace agreement with the FARC, there is little sentiment among Colombians to
support ratification of an agreement whose conditions have been opaque. This
will weaken Santos and hinder his appointments to the NHA and Ecopetrol and its
energy regime amid formidable opposition led by Uribe in Congress. If Uribe's
candidate, Óscar Iván Zuluaga, succeeds, stability might come to the energy
sector at the barrel of a gun. However, the FARC, its remnants, and the bacrims
will continue to harm the sector, as they are doing despite the thousands of
rounds of ammunition used against them.

Jack
Devine, president, and Amanda Mattingly, director for Latin America, at The
Arkin Group: Attacks
on the Colombian pipeline system by FARC rebels over the last year speak to the
ongoing struggle of the FARC insurgency in the country. Though the rebel group
is said to be at its weakest point in decades and has been in peace talks with
the government since 2012, it continues to use tactics such as the oil pipeline
attacks as a way to apply pressure on the state and remain a threat. The rebels
specifically go after state or commercial entities of strategic importance to
the Colombian government. Usually, the pipelines are back online within a
matter of days, but the losses are adding up, particularly given the growing
frequency and severity of such attacks. For example, the recent months-long
closure of the Caño Limon-Coveñas pipeline run by the state entity Ecopetrol
reportedly cut the daily Colombian production by 7 percent. The government
claims that such attacks do not affect output, but it is a setback for Colombia
which is seeking to increase its oil exports. Indeed, as Colombia continues to
increase its production levels-and neighboring Venezuela continues to
decline-the oil and gas sector will become increasingly important to the
country in economic and political terms. The Colombian government must begin to
ramp up the security around the pipelines, ports and new projects in this
sector to ensure that rebel groups can no longer exploit vulnerabilities in the
system. Increased coordination among Colombian security forces around the oil
and gas sector will be necessary, as well as proper training, equipment and
intelligence to help mitigate the risk of further attacks.

Oliver
Wack, Colombia analyst at Control Risks in Bogotá: The marked increased in
terrorist attacks on energy infrastructure, more than 200 percent since 2011,
according to Defense Ministry statistics, is the result of the confluence of
several dynamics related to the country's internal conflict. First, it comes as
a result of the sustained military offensive against the country's guerrilla
groups during the Uribe government (2002-10). In reaction to this offensive,
guerrilla groups underwent a shift in their strategy, and military efforts
today are focused mainly on staging hit-and-run attacks and the use of
'classic' guerrilla warfare tactics, for example through the use of snipers,
ambushes, landmines and improvised explosive devices. Second, it is the result
of the FARC's goal of projecting its continuing military relevance as a means
of improving its bargaining position at the negotiating table in Havana, while
at the same time refraining from staging major attacks with civilian casualties
that could turn public opinion further against the group. Infrastructure
targets are particularly attractive given that they can be considered low-risk
targets that are nearly impossible to protect and don't require much in the way
of logistical and financial planning. A likely successful outcome of the peace
talks would certainly not lead to an immediate improvement in the security
situation. Especially extortion related crimes, which potentially include
small-scale terrorist attacks, will likely increase in the period following a
peace agreement. However, we expect the situation to improve in the long term
as FARC successor groups establish a preliminary order and focus on their core
businesses, which include mining and drug trafficking, and ideological reasons
for targeting infrastructure subside.

Sergio Torres, consultant at IPD Latin
America: Guerrilla groups remain the sole source of
pipeline attacks in Colombia. The Ministry of Defense estimates that the FARC
is responsible for around 75 percent of all attacks; the ELN has perpetrated
the remaining 25 percent. Most of these attacks occur near the Venezuelan and
Ecuadorean borders, where guerrilla presence overlaps oil activities. Porous
binational borders and insufficient state presence contribute to the problem.
Ecopetrol estimates that attacks caused about 3 million barrels of oil
production losses in 2013. The FARC has perpetuated assaults in an attempt to
increase its negotiating clout during the Havana peace talks. The attacks
create media impact and reinforce the perception that the guerilla factions are
strong. They disrupt military initiatives against insurgent groups, create
public opinion challenges for the government, affect investor confidence and
ultimately result in material economic cost to the nation. While the government
has invested in technology and significant military resources to protect
infrastructure, the integrity of energy assets will not improve until economic
development, application of the rule of law and improvements in social
indicators are fostered more effectively in rural Colombia. The failure to do so
encourages the existence of illegal armed groups and lies at the heart of
Colombia's conflict. The longer the state takes to eradicate this situation,
the more complex security issues will become. With criminal gangs emerging, the
security panorama in Colombia will remain a dynamic, moving target that will
continue to affect the energy sector.